Fewer hours at work - but it's not all good news

Australians are working an average of 32 hours a week, the lowest in over 30 years, detailed labour force data released by the Bureau of Statistics yesterday show.

But what looks like a reinforcement of a stereotype that Australians are living the good life rather than working hard is instead a reflection of a longer trend away from full-time towards part-time work, more flexible working hours, and the increasing casualisation of the work force, economists say.

"We know that over the last 12 to 18 months, conditions have been very tough on the economy and activity has been sluggish, especially for the retail sector," said Commonwealth Securities economist Savanth Sebastian, who pulled the figures together.

"As a result, while businesses are planning for a future turnaround and holding on to key staff, they are trying to maintain a lower cost base and that means cutting hours back, even for some of those full-time workers."

Falling ... the average number of actual hours worked by employees in Australia. Photo: CommSec

Slightly below average

Compared with other countries, the number of hours Australians work appear neither enviably low nor outrageously high, averaging 1693 a year in 2011, or 32.5 hours a week, according to data collected by the Organisation for Economic Co-operation and Development (OECD).

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The figures showed that Germans worked an average of just 27.2 hours a week, while Americans worked 34.4 hours per week.

In Greece, where unemployment is soaring, the workforce put in an average of 39.1 workers a week. The OECD average is 34.2 hours worked by employees per week for 2011.

More seniors looking for work ... a higher participation rate among older workers. Photo: CommSec

While the participation rate, the percentage of people either in work or looking for work, for the workforce hit five-year lows of 65.2 per cent by the end of last year, a record number of people aged above 65 - 12 per cent - are entering the job market, the Bureau of Statistics data showed.

The average participation rate for those above 60-years-old was also at a record-high of 53.4 per cent.

Going down ... this graph, from May 2012, shows how the decrease in the proportion of full-time workers in more recent years has led to a decrease in the average hours worked by all employed people. Photo: Australian Bureau of Statistics

"They won't be working full-time. They'll be working a lot of those casual hours, and I think that will be adding to the slide that we've been seeing in the average hours worked," Mr Sebastian said.

The participation rate has also been a key reason why the employment rate has not risen sharply in the past year despite growing evidence of a softening economy as investment in the mining sector peaks, JPMorgan economist Tom Kennedy said.

"The participation rate is currently at 65.2 per cent. If that was up near pre-crisis highs of 65.5 or 65.6 per cent, that jobless rate would be a lot higher, maybe 5.7 or 5.8 per cent," Mr Kennedy said.

Rising jobless rate

A further shift towards part-time work was also expected as growth slows, consumer income and domestic spending falls and businesses shy away from increasing their headcount, he said, adding that it was not clear which industries would be able to compensate from the expected weakening of the mining sector.

"The key trend we are looking at over the next few months is a rising jobless rate. So the low at 5.2 per cent that we had the month prior to this one we estimate will get to about 6 per cent by December this year."

Earlier this month, the National Australia Bank tipped the unemployment rate to rise to about 5.75 per cent later this year.

ANZ said it also expected the unemployment rate to rise to about 5.75 per cent by mid to late 2013.